UK Parliament / Open data

Deregulation Bill

My Lords, a bit like government Amendments 25 to 35, which are in this group, Amendment 24B will close an unforeseen loophole in existing legislation. The loophole arises because, where letting agents are managing a tenant’s deposit on behalf of the landlord, they usually put their details on the documentation given to tenants. Obviously, that is particularly useful where landlords live abroad and where their only address for service in the UK is therefore that of the letting agent.

Under the terms of the tenancy deposit legislation, certain information, known as prescribed information, has rightly to be given to the tenants. Unfortunately, the wording of the order is highly prescriptive. It requires the landlord’s contact details, even if it is the agent who manages the deposit. There have been claims by tenants, including in court, that deposits have not been protected in accordance with the law. In fact, the agent has done everything correctly, other than to put down its address for service rather than the landlord’s home address. Nevertheless, a claim on behalf of a tenant has been upheld by a county court, meaning that what has been normal practice ever since tenancy deposit protection was introduced in 2007 is now potentially unlawful. There has not as yet been a High Court case on it, but clearly, given the county court’s case, there is now uncertainty and it seems much more sensible to fix this problem now before it is tested in the High Court. In the mean time, solicitors are taking this to court and challenging the proper protection of a deposit on behalf of a tenant.

2.45 pm

My slightly technical, but perfectly formed, amendment to the Housing Act 2004 would clarify the “prescribed information” which landlords or their agents must

supply to tenants in relation to the deposit, alongside protecting deposits with an approved government scheme. The prescribed information for tenants is set out in a statutory instrument and includes,

“the name, address, telephone number, and”—

because they are a very modern Government—

“any e-mail address or fax number of the landlord”,

“landlord” being the critical word. Fairly obviously, the purpose of giving that information to the tenant is to help them at the end of the tenancy to be able to contact the person who is holding their deposit so that they can get it back quickly.

In practice, it is very often the letting agent rather than the landlord who holds the deposit or puts it in the appropriate insurance or tenant deposit scheme, so it is their details which are important to the tenant because it is about getting back the deposit. Therefore, lettings agents put their contact details in the prescribed information rather than those of the landlord. This practice was confirmed in advice from the tenancy deposit scheme and indeed from the Government. However, yesterday the Government’s website was still stating that the information that needs to be given is,

“their (or the letting agency’s) name and contact details”,

the word “their” referring to the landlord. Therefore, the Government are saying that it is the landlord’s or the letting agent’s name and contact details that need to be given, although that is not what, so far, one court has found.

I am advised that the Government may say, when the noble Lord comes to reply, “Don’t worry about it because the primary legislation says that where the word ‘landlord’ is used, it also refers to letting agents”, but that is not what the statutory instrument says and that is what we are seeking to clarify. The statutory instrument is clear: despite all the advice that has been given, the wording states that the details must be those of the landlord.

The problem is that if this is found—as we think it will be—to be open to challenge, the penalty is very serious. If there is non-compliance with the detail of the prescribed information order, the defective information can invalidate a Section 21 possession and there can be a penalty on the landlord as high as three times the amount of the deposit. Therefore, this very small but perfectly formed amendment would allow the details of the agent who is holding, or organising the holding of, the deposit to provide their details rather than those of the landlord in those circumstances.

We might note in passing that there is an added advantage to this. Since the beginning of October, every letting agent has had to belong to an ombudsman scheme, but that is obviously not the case for landlords. Therefore, there is an added protection for tenants should they have any complaints about the address not being readable or being changed. They can go to an ombudsman, whereas that is not the case should the landlord have moved in that time.

Therefore, the amendment is necessary to deal with confusion among agents about whose details are included. We are talking about 1 million tenancies here, so this is serious stuff and we need to get it right. It will assist tenants by ensuring that they have the details of the

agent who is managing the deposit on behalf of the landlord, and it is clearly to the advantage of landlords, who otherwise risk being found in contradiction of the requirements. The amendment is supported by the tenancy deposit scheme and by the Royal Institution of Chartered Surveyors, the National Association of Estate Agents, the Association of Residential Letting Agents and the Residential Landlords Association. It must be fairly clear to the Minister that everyone who is handling this says that it needs fixing.

For similar reasons, we concur with the amendments that the Minister will move shortly to correct something that, because of a court case, needs challenging. However, our amendment is equally urgent, so I beg to move.

About this proceeding contribution

Reference

756 cc516-8GC 

Session

2014-15

Chamber / Committee

House of Lords Grand Committee
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